Once, looming free trade with the U.S. was the most divisive issue in Canada. Today, almost everyone agrees on the Canada-EU deal. What’s changed?

European Commission President Jose Manuel Barroso shakes hands with Canadian Prime Minister Stephen Harper during a press conference following the signing of a free-trade accord more than four years in the making. The deal has been met with almost universal approval in Canada.

By:Eugene Lang Published on Wed Oct 30 2013

Twenty-five years ago this month a general election was fought in this country over free trade with the United States. It was one of the few federal elections in recent memory where a policy question was central to the campaign.

And it was highly divisive. The Progressive Conservative government of Brian Mulroney, the business community and expert economic opinion were arrayed on one side, arguing free trade with America was almost a panacea to solve Canada’s well-worn economic woes. These formidable forces lined up against the Liberals, the NDP, trade unions and social policy groups, who argued nothing less than the sovereignty of the Canadian state was on the line with free trade.

It was a rich policy debate, the likes of which we haven’t seen since in an election campaign.

The Mulroney Tories were taking a big political risk in 1988 by staking their mandate on free trade with the Americans. A quarter century ago Canadians were by no means unambiguously in favour of trade liberalization. There was great division in the country on this issue.

And while the Progressive Conservatives won that election with a reduced majority, trade liberalization remained a polarizing issue in Canada for many years after that vote, as the Canadian economy suffered serious short-run economic pain digesting free trade with the U.S., particularly in the manufacturing heartland of Ontario.

Exactly 25 years after that pivotal election, Prime Minister Harper has all but concluded a free-trade pact with the European Union, which the government claims is even more significant than the Canada-U.S. Free Trade Agreement.

Yet in sharp contrast to the late 1980s, there is no hue and cry today. Elite opinion is almost universally with the government this time. There are a few voices of dissent among the usual suspects — the supply managed dairy and generic drugs industries and the autoworkers union—but the sky is falling narrative served up by the centre and left in the past has gone the way of the Dodo.

The Liberals and New Democrats broadly support free trade with Europe (although both have voiced criticisms over specific elements of the nascent agreement). Social and environmental groups, which fought trench warfare against the Canada-U.S. FTA for years, have little to say on this agreement. The mainstream media, which were also divided over free trade in the 1980s, see the prime minister’s deal as a clear political winner. Free trade with Europe won’t be much of an issue in the 2015 election.

Which begs a central question. Have Canadians become true free traders, embracing the world-view of the great 19th century liberal thinker David Ricardo, who argued that free trade is always a good thing economically? If the opinion of political parties and elites on all sides of the spectrum were a rough proxy for the views of Canadians, then it would seem we are all Ricardians now.

Or is it that Canadians are no more enthusiastic about free trade today than a generation ago, we are just more comfortable with the dance partner this time around? We feel less threatened by distant, soft, diplomatic Europe, than we did with on-our-doorstep, in-your-face, take-no-prisoners America. Why would we fear Europe, whose welfare state and environmental regulations, one of the central preoccupations of the anti-free trade crusaders a generation ago, are in fact more progressive than what Canada has on offer?

Yet the inescapable fact is that the EU today, with its half a billion citizens and $16 trillion gross domestic product is every bit as intimidating an economy as America was then.

Two decades ago, a plausible case was made that irrespective of the text spelling out our new bilateral economic relationship with the U.S., the sheer size and power imbalance between the two signatories was so severe that when push came to shove those words wouldn’t be worth the paper they were printed on. Subsequent, long-running disputes with the Americans over such things as lumber and some agriculture products, in which Canadian exporters were put through an American wringer, provide some evidence to support that critique.

The real test of Canadians’ enthusiasm free trade won’t likely be evident over a deal with soft-spoken Europeans who look like us. That will come with countries like India (in which Canada is also pursuing a free trade deal), with its billion people, cheap labour and lax workplace standards. Or perhaps China, which some in the business community have suggested we need to do a deal with.

It will take a free-trade agreement with those countries to reveal whether Canadians have become Ricardians or are just Europhiles.

Eugene Lang is BMO Visiting Fellow, School of Public and International Affairs, Glendon College, York University

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